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In the first quarter, steel consumption in the domestic market as well as exports declined due to the impact of the COVID-19 pandemic, but many large steel industry enterprises still recorded positive operating results and clear growth. remarkably profitable.
According to the Vietnam Steel Association (VSA) in the first quarter of 2020, businesses have produced nearly 5.73 million tons of steel, down 6% compared to the same period in 2019. Sales volume reached 5, 03 million tons, down 12.4%. In particular, steel exports reached only 1.02 million tons, down more than 21%.
Measures to blockade and spread the social gap to prevent the spread of COVID-19 have caused economic activities in general and construction in particular to be delayed not only in Vietnam but also in the world, leading to demand. steel slump.
The impact of COVID-19 on steel enterprises is likely to be more clearly reflected in second-quarter business results due to the longer period of social gap applied in April than in March. stricter. For example, all construction works in Hanoi were halted during the peak of COVID-19 prevention from April 1 to April 15.
After the restrictive measures are removed, the market also needs some more time to fully recover.
Hoa Phat has grown its market share, revenue and profits
In the first quarter, Hoa Phat achieved net sales of VND 19,233 billion, up 28.5% over the same period last year. The lower cost of goods sold helped gross profit to soar to nearly 44%, recording VND 3,763 billion.
Financial expenses (mainly interest expenses) increased by 241% to VND 823 billion, so profit after tax grew at a rate lower than gross profit at 27%, recorded at VND 2,305 billion.
In a recent analysis, Ban Viet Securities (VCSC) said that Hoa Sen's profit recovered strongly thanks to the accumulation of hot rolled steel (HRC) of raw materials at low costs.
According to the Vietnam Steel Association (VSA), HRC prices on 10/4 are at 400 USD / ton (freight and freight - CFR at Dong A port) decreased by 50-55 USD / ton compared to the beginning of the month. 3/2020. Compared to the beginning of 2020, this price has decreased by 90-92 USD / ton.
HSC Securities quoted Vietnam Steel Association (VSA) data as saying that in the first half of the fiscal year 2019-2020, Hoa Sen sold 581,288 tons of galvanized iron sheet, down 4.7% compared to the same period and 181,386 tons. steel pipe, down 10.9%.
The company's market share decreased to 29.5% for galvanized sheet (from 31.4% in the first half of 2019) and 15.3% to steel pipe (from 15.7% in the first half of 2019).
In response to the current market conditions, Hoa Sen has restructured its operations by focusing on highly profitable products such as galvanized iron and color corrugated iron instead of products with low profit margins such as steel pipe.
In January 2020, Hoa Sen launched a line of high-class galvanized iron sheets with higher prices. According to HSC, the improvement of product structure has offset the decline in production during this period.
In addition, the completion of the process of restructuring the distribution system from the model of a provincial branch to a model of a branch shop of the provincial branch has helped Hoa Sen cut costs.
The second half of 2020 is likely to bring many challenges to Hoa Sen. HSC believes that the decline in export volume in the coming months will be negatively affected as the export market accounts for 40.2% of total sales volume of Hoa Sen.
Not to mention, the implementation of the national social gap regulation from 1/4 to 22/4 also partially reduces domestic steel demand.
Nam Kim changed from loss to profit
Net revenue of Nam Kim Steel (Code: NKG) last quarter reached nearly 2,452 billion VND, down 16.7% compared to the first quarter of 2019. However, COGS dropped by 24% to 2,240 billion dong. Thanks to that, the company still saw a gross profit of 212 billion dong while the same period last year saw a gross loss of over 1 billion dong.
Profit after tax reached VND 41.5 billion, a significant improvement compared to the loss of VND 101.6 billion in the same period last year.
According to VSA data, Nam Kim sold 148,272 tons of galvanized iron and steel pipes in the first quarter of 2020, down 11.4% over the same period. Market share decreased from 11.6% in the first quarter of last year to 11.2% in the last quarter. The average selling price also dropped by 5-6% yoy to VND 16.5 million / ton.
According to the market structure, export revenue reached VND 1,131 billion, down 11.2% over the same period and accounted for 46.1% of the first quarter 2020 revenue. The domestic market recorded VND 1,328 billion, down 21.1% and contributing 53.9% to the revenue structure.
Viet Duc Steel Pipe (VGPIPE, Code: VGS) reported profit after tax of VND 10.6 billion, inching slightly from VND 10.2 billion in the first quarter of last year.
Pomina Steel (Code: POM) posted a loss of 56 billion dong in the first quarter of 2020, lower than the loss of 84 billion dong in the first quarter of 2019. Gross profit increased significantly from VND 18 billion to VND 88 billion.
Many other businesses witnessed downward results such as: Thai Nguyen Iron and Steel (Tisco) profit fell from VND 8.1 billion to VND 4.3 billion, Vietnam Italy Steel (Code: VIS) from a loss of 33.6 billion. The first quarter of last year became a loss of VND 41.7 billion in the first quarter of this year.
Source: vietnambiz.vn
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